Japan Stocks mixed on US-China trade jitters

Headline indices of the Japan share market were mixed on Friday, 03 August 2018, as the latest exchange of trade threats between Beijing and Washington offset positive sentiment emanating from technology-led gains on Wall Street overnight. Among TSE33 issues, 24 issues declined, while 9 issues inclined, with shares of Foods, Electric Power & Gas, Iron & Steel, Pulp & Paper, Insurance, and Real Estate issues being notable losers, while Transportation Equipment, Oil & Coal Products, Precision Instruments, and Mining issues were notable gainers. Around late afternoon, the benchmark Nikkei 225 index rose 0.04%, or 9.39 points, to 22,521.92. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 0.35%, or 6.10 points, to 1,745.98.

Investors cautious mood came amid an elevation in trade tensions between the world's top two economies intensified midweek after US President Donald Trump raised pressure on China by proposing a higher 25% tariff on $200 billion worth of Chinese imports from a previously announced 10%. China responded on Thursday, saying that it would hit back if the United States takes further steps hindering trade, including applying the higher tariff rate.

 

The United States has already slapped 25% tariffs on Chinese goods worth $34 billion to punish Beijing for what it says are its unfair trade practices. China immediately responded with equal measures.

Investors are becoming increasingly concerned about how the slowing Chinese economy will fare in a major trade spat with the United States. Data released earlier this week suggested that the Chinese economy is already starting to feel pain from US tariffs introduced over the last few weeks. China's July purchasing managers index, which measures the health of the manufacturing sector, suggested the country's huge export industry is cooling.

Investors also remain cautious ahead of the July US jobs report due later on Friday, which will give a reading on the health of the world's largest economy and possible clues about the pace of Federal Reserve interest rate rises.

Shares of steel and shipping sectors were down amid persistent concerns about trade conflicts. Tractor maker Kubota slid 9% following weak quarterly results and a forecast cut for the year on a decrease in agriculture-machinery sales in China.

Technology stocks gained, on tracking gain in Apple shares in US market overnight after the iPhone maker became the first publicly traded US Company worth a trillion dollars. Chip maker was up 1.8% while Panasonic gained 2.7% and Sony rose 0.5%.

ECONOMIC NEWS: Japan Nikkei Services Sector Expands At Slower Pace In July -- Japan services sector continued to expand in July, albeit at a slower pace with a PMI score of 51.3, the latest survey from Nikkei showed on Friday. That's down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Individually, employment growth accelerated, but output and new business expanded at softer rates. Price pressures intensified. The survey also showed that Japan's composite index fell to a score of 51.8, down from 52.1 in June.

CURRENCY NEWS: The Japanese yen tad softer against U.S. dollar on Friday, as recent strength in the greenback following the US Federal Reserve's latest signal that it will proceed with an interest rate hike in September, but weakness in yen was milder due to flare-up in trade tensions between the United States and China. The dollar was quoted at 111.71-72 yen compared with 111.59-69 yen in New York and 111.60-61 yen in Tokyo on Thursday.

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